玉格格
27-11-13, 14:16
http://sg.finance.yahoo.com/news/ura-masterplan-2013-affect-property-market-152253575.html
By now you’ve probably read lots of media reports about the Urban Redevelopment Authority’s (URA) Draft Masterplan 2013, a medium term plan which details statutory land use and guides Singapore’s development over a ten to fifteen year period. In this post I hope to synthesize the different views and look at how the concepts outlined in the Master Plan will affect the property market, and whether it throws up any interesting opportunities.
The changing focus of the Master Plan
The URA’s role is to plan the physical development of Singapore and to optimize the use of the country’s limited land resources. To this end it puts out the Concept Plan, which is a long term strategic land use plan that guides Singapore’s development over a forty to fifty year period, ensuring that Singapore has sufficient land to meet long term population, economic and quality of life goals. It is reviewed every ten years, and the last one was completed in 2011.
Historically, the Master Plan has rendered the broad strategies outlined in the Concept Plan into detailed permissible land use and density plans for developments in Singapore. It is reviewed every five years.
In the Draft Masterplan 2013, the URA is moving away from its previous mostly quantitative role (i.e. mainly looking at plot ratios and land use), and starting to focus on the qualitative aspects of living in Singapore. We can see this shift from the 6 key focuses as stated by the URA:
1. Housing
2. Economy
3. Recreation
4. Identity
5. Transport
6. Public Spaces
Out of the above 6 focuses, we see that half of them (Recreation, Identity, Public Spaces) are focusing more on the intangible and people-centric aspects of living in Singapore, with an aim to boost the quality of life here beyond just the hard aspects of having a comfortable home in a convenient location with good transportation links and facilities.
Decentralization of work will create new market opportunities
One of the trends we’ve been seeing in the recent Master Plans is the decentralization of employment centers to different areas of Singapore, e.g. to Jurong and Paya Lebar, partly as a means to ameliorate the transportation capacity problem of a large part of the population commuting to the CBD to work.
The Master Plan 2013 introduces the North Coast Innovation Corridor, which will see the emergence of the Woodlands Regional Centre, the Punggol Learning Corridor and Creative Cluster. There will also be the gradual development of new industrial estates such as Jalan Bahar, Wenya, Tengah, Lorong Halus and Seletar West.
Where people go to work, so do opportunities to invest in and rent out property. The key for investors is to gauge the speed and commitment of the government to incentivize developments in all the new centers. The irony is that with so many potential centers, there is a diffusion of focus and not all will achieve an equal level of success.
131125 Figure 1 Figure 1: Proposed Holland Village Extension (Source: URA)
My sense is that the centers that are closest to the traditional economic hubs like the CBD and Orchard (e.g. Paya Lebar, Holland Village) have the greatest chance of developing quickly, and consequently have better investment prospects.
No more premium for being “close to the MRT”?
As part of the effort to improve the public transportation system, by 2030 the rail network will double to 360km, and 80% of all homes will be within a 10-minute walk to an MRT station.
Traditionally homes near to an MRT station will usually be able to command a premium to less well connected homes. But if 80% of homes are within a 10-minute walk to the MRT, will this premium still exist?
I believe being near to an MRT station will eventually become less important to which MRT station and line you are near to. Homes near MRT interchanges (where two or more lines cross) will likely command a larger premium. Homes near MRT stations on lines with key business hubs (e.g. the East-West line which has connectivity to the hubs of Jurong, the CBD, Kampong Bugis, Paya Lebar and Tampines) will have better prices and rentals versus other lines which may require multiple transits to get to the key hubs.
Lots of new homes but who will live in them?
131125 Figure 2 Figure 2: Artist’s impression of Marina South urban village (source: URA)
How about new areas like the Greater Southern Waterfront and Marina South? For the former, I believe this will be a very long term development as the southern coastline will only be freed up when the ports move from Pasir Panjang and Tanjong Pagar by 2027 – that’s one or two property cycles away, so no need to worry about it for now. For the latter, the plans to create a car-free environment and community in the Marina South area are interesting. But with nearby developments costing close to $3000 per square foot, will it be a community just for the rich?
Also with an upcoming record completion of homes coming in the next few years that will weigh on the rental and resale markets, and the curbs on foreign workers and slowing population growth weighing on housing demand, will there be enough demand for homes in all of these new areas?
By now you’ve probably read lots of media reports about the Urban Redevelopment Authority’s (URA) Draft Masterplan 2013, a medium term plan which details statutory land use and guides Singapore’s development over a ten to fifteen year period. In this post I hope to synthesize the different views and look at how the concepts outlined in the Master Plan will affect the property market, and whether it throws up any interesting opportunities.
The changing focus of the Master Plan
The URA’s role is to plan the physical development of Singapore and to optimize the use of the country’s limited land resources. To this end it puts out the Concept Plan, which is a long term strategic land use plan that guides Singapore’s development over a forty to fifty year period, ensuring that Singapore has sufficient land to meet long term population, economic and quality of life goals. It is reviewed every ten years, and the last one was completed in 2011.
Historically, the Master Plan has rendered the broad strategies outlined in the Concept Plan into detailed permissible land use and density plans for developments in Singapore. It is reviewed every five years.
In the Draft Masterplan 2013, the URA is moving away from its previous mostly quantitative role (i.e. mainly looking at plot ratios and land use), and starting to focus on the qualitative aspects of living in Singapore. We can see this shift from the 6 key focuses as stated by the URA:
1. Housing
2. Economy
3. Recreation
4. Identity
5. Transport
6. Public Spaces
Out of the above 6 focuses, we see that half of them (Recreation, Identity, Public Spaces) are focusing more on the intangible and people-centric aspects of living in Singapore, with an aim to boost the quality of life here beyond just the hard aspects of having a comfortable home in a convenient location with good transportation links and facilities.
Decentralization of work will create new market opportunities
One of the trends we’ve been seeing in the recent Master Plans is the decentralization of employment centers to different areas of Singapore, e.g. to Jurong and Paya Lebar, partly as a means to ameliorate the transportation capacity problem of a large part of the population commuting to the CBD to work.
The Master Plan 2013 introduces the North Coast Innovation Corridor, which will see the emergence of the Woodlands Regional Centre, the Punggol Learning Corridor and Creative Cluster. There will also be the gradual development of new industrial estates such as Jalan Bahar, Wenya, Tengah, Lorong Halus and Seletar West.
Where people go to work, so do opportunities to invest in and rent out property. The key for investors is to gauge the speed and commitment of the government to incentivize developments in all the new centers. The irony is that with so many potential centers, there is a diffusion of focus and not all will achieve an equal level of success.
131125 Figure 1 Figure 1: Proposed Holland Village Extension (Source: URA)
My sense is that the centers that are closest to the traditional economic hubs like the CBD and Orchard (e.g. Paya Lebar, Holland Village) have the greatest chance of developing quickly, and consequently have better investment prospects.
No more premium for being “close to the MRT”?
As part of the effort to improve the public transportation system, by 2030 the rail network will double to 360km, and 80% of all homes will be within a 10-minute walk to an MRT station.
Traditionally homes near to an MRT station will usually be able to command a premium to less well connected homes. But if 80% of homes are within a 10-minute walk to the MRT, will this premium still exist?
I believe being near to an MRT station will eventually become less important to which MRT station and line you are near to. Homes near MRT interchanges (where two or more lines cross) will likely command a larger premium. Homes near MRT stations on lines with key business hubs (e.g. the East-West line which has connectivity to the hubs of Jurong, the CBD, Kampong Bugis, Paya Lebar and Tampines) will have better prices and rentals versus other lines which may require multiple transits to get to the key hubs.
Lots of new homes but who will live in them?
131125 Figure 2 Figure 2: Artist’s impression of Marina South urban village (source: URA)
How about new areas like the Greater Southern Waterfront and Marina South? For the former, I believe this will be a very long term development as the southern coastline will only be freed up when the ports move from Pasir Panjang and Tanjong Pagar by 2027 – that’s one or two property cycles away, so no need to worry about it for now. For the latter, the plans to create a car-free environment and community in the Marina South area are interesting. But with nearby developments costing close to $3000 per square foot, will it be a community just for the rich?
Also with an upcoming record completion of homes coming in the next few years that will weigh on the rental and resale markets, and the curbs on foreign workers and slowing population growth weighing on housing demand, will there be enough demand for homes in all of these new areas?